The Managing Director of Toyota Nigeria Limited (TNL), Mr. Kunle Ade-Ojo has advised the federal government to consider introducing tax incentives for operators in the nation’s auto industry to stimulate the sector to boost the economy.
Ade-Ojo gave the advice recently in Lagos, while briefing the press on TNL’s performance as the year comes to a close. He stated that it would be appropriate for the government to consider tax reduction as is done in other countries with economy in recession.
He said if the government did not reduce taxes, then companies would invariably die, adding that this would be counterproductive to the government’s quest to stabilize the economy.
According to him, if things continued this way much longer, some companies may have to go under, while others may be forced to retrench most of their staff.
The managing director said it had been a tough year but that TNL was doing all that was necessary to weather the storm that has been hitting most companies and industries this year, adding that TNL had strong footing that would enable it carry on in the years ahead.
He said, “The foreign exchange is still a major challenge to everybody and, as a result of that, when you compare imports this year with that of last year, as far as brand new vehicles is concerned, there has been a drop of almost 50 per cent from import tax duty from January to September this year.
“Last year, the whole market brought about 15,000 and this year we are struggling to bring in 6,000, which is a major decline as far as importation is concerned.”
He said the total sale last year was about 31,000 but that this year “we are forecasting about 15,000. So, everybody has sort of gone down,” adding that TNL sold about 7,000 vehicles last year but is forecasting about 4,000 vehicles this year.”
Look at next year’s business, he said “The foreign exchange issue will continue to be major, and also the price of vehicles because between January and now, prices of vehicles have more or less doubled from where they used to be. Some of us have had to go to the black market to source foreign exchange and this has major impact on vehicle prices.”
Regardless, he said the company was looking at other options for business growth and consolidation, adding that one of these was its after sales department. “We are not just an organization that sells vehicles, because we are also in the business of maintaining those vehicles. From next year, one of our major focuses would be the after sales service aspect of the business. We will be focusing on it more than ever before, because people are going to be using their vehicles much longer. We have actually started a process to be there from next year to continue serving our loyal customers.”
In addition to the after sales service, he said their focus would also be on the retention of their present customers, saying “our focus will be to retain the customers we have while trying to get new ones. Eighty per cent of our energy will be focused on the existing customers to ensure they are comfortable while 20 per cent will be focused on getting new customers.
On the impact of the recession on the auto policy, he said the scarcity of foreign exchange had negative impact on the assembly of vehicles in the plants already established in the country.
Foreign exchange scarcity, he said was a major issue, adding that some of the vehicles they brought in this year were those manufactured last year. “Some of these vehicles are coming in in bits and pieces. They were manufactured but we could not bring them in and as a result of that forex issue we are unable to order kits for the production of our Hiace buses.”
He said TNL had been planning ahead, as far as risk management was concerned in the last 3 to 4 years, but that the present situation was more than what they prepared for. “But as soon as we understood how the effect would be on us, we made certain changes. For example, we did not lay off staff, but we have done a lot of cost reduction since business is not as it used to be.”